from wikiHow - The How to Manual That You Can Edit
Buying distressed houses, repairing them and then reselling them at a profit is commonly known as "flipping" a house. Successful flipping is dependent on finding properties that are priced low enough to allow for a profit when the initial investment and cost of repairs are subtracted from the final sale price. The following tried and true methods will help you to find houses to flip.

Steps

Read the mortgage default notices in the newspapers. In most areas, banks are required to advertise before they can foreclose on a property. Homeowners in default often try to sell their home before the foreclosure to protect their credit. This practice is known as a short sale. While there are excellent prospects to be had, the bank holding the mortgage will have to approve the sale so it may take longer to complete the sale than it would to complete a traditional transaction.

Review the bank-owned (REO) properties available for sale. Many banks list these on their websites to make it easier for prospective buyers to search for them. If you find a property that you are interested in flipping, but believe it is priced too high, check back every few weeks. Most banks reduce the asking price on a 3- to 4-week schedule in an attempt to reduce holding costs. With a little patience, you may still be able to pick it up at a price with which you are comfortable.

Visit estate sales advertised in the area and inquire if the property itself is available for purchase. Estate properties are frequently in good repair and only need cosmetic improvements, which make them an excellent candidate for flipping.

Search through online resources, including the local multiple listing service (MLS), HUD.gov and realtor.com. Online resources allow you to search by a set of criteria that you can expand or narrow to receive results specifically targeted to your interests. Some sites will also send you updates when new properties are listed that meet your criteria.

Advertise in local print media that you are interested in purchasing investment properties. If you are able to pay cash to close the deal quickly, you will have your pick of properties.

Consider hiring a real estate broker to assist you in your search. A broker will be able to regularly update new listings on the market much faster than most individuals, which will increase the odds of you getting to the new listings first.

Tips

Always order a full title search before you pay cash for a property to flip. Otherwise, you may have to fight a court battle to recoup your investment if the title can not be legally conveyed.

Before you find houses to flip, you need to prepare a general budget breaking down the original investment to know how much you can afford to invest in your flips.

If you are financing the purchase of your flip houses, you should have your financing in place before you start looking for properties. Otherwise, you may find your contract taking a backup position to an offer from an investor who has cash in hand.